Preliminary Injunction Stops Department of Labor Rule

On November 22, just a few days before its December 1 implementation date, a Texas court issued a nationwide preliminary injunction stopping implementation of the Department of Labor’s (DOL) rule to more than double the current salary threshold for certain exemptions from overtime pay. Twenty-one states, the U.S. Chamber of Commerce, and other business groups filed lawsuits, later consolidated into one, arguing that the DOL exceeded its statutory authority in raising the salary threshold and by providing for the automatic adjustment of the threshold every three years. The DOL rule raises the salary threshold from $23,660 to $47,476 annually, which more than doubles the minimum annual salary a worker can earn and qualify for an exemption from the overtime pay provisions of the Fair Labor Standards Act. The rule will also adjust the threshold every 3 years based on the 40th percentile of wages for full-time salaried workers in the lowest wage earning geographic area captured by the Census.

Judge Mazzant of the Eastern District of Texas cited concerns that the rule improperly created a salary test that would consume congressional intent that the exemption be based on the type of duties performed. Additionally, Judge Mazzant found merit in plaintiffs’ argument that states would be irreparably harmed by implementation of the rule before a final decision by the court because states facing budget restraints would have to expend a substantial sum of unrecoverable public funds to increase salaries or pay overtime to employees and may possibly have to layoff or reorganize workforces causing a substantial interference in government services. READ MORE….